Gamesa cuts pay off in Q3

SPAIN: A strong third quarter has led Gamesa to assert that it will hit the upper end of its full-year targets for sales and margin.

Gamesa is positive despite a fall in sales
Gamesa is positive despite a fall in sales

A bullish report shows the Spanish manufacturer returning to a slim net profit of EUR 31 million in the first nine months of the year, compared with a loss of EUR 67 million in the corresponding period last year.

Crucially, the company also managed to recover its margin for earnings before interest and tax to 5.2% over the period, up from a measly 0.2% a year before.

But the improved margin comes on the back of deep cuts in its workforce and the closure of factories rather than a rise in revenue. There was a EUR 99 million reduction in fixed cash costs, while sales took a 20% fall to EUR 1.7 billion.

Gamesa said that the fall in group revenue was due to "slowing demand" and its "strategy of controlling working capital and aligning manufacturing to deliveries, plus the lower contribution from the wind farm business".

In terms of turbines sold, the company again saw a contraction, with 1.4GW shipped, compared with 1.6GW a year before. But Gamesa assured investors that it expects to hit the upper end of its 1.8-2GW target for the full year.

Latin America was the largest sales destination in the third quarter, accounting for 51% of the total, followed by Europe and the rest of the world with 29%, and India with 18%. Sales to the US and China declined, leaving each region to contribute only 1% of sales.

The manufacturer had an order backlog of 1.8GW in October, 14% higher than a year earlier.

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